Linda Sara Sarder on LinkedIn: #acccounting #bookkeeping #tax #accountsreceivable #accountspayable… (2024)

VAT Reconciliation Process in UK:VAT reconciliation is an essential process for businesses in the UK to ensure that their VAT records accurately reflect the transactions they've undertaken and the VAT they've paid or collected. Here's a general guide on how to create VAT reconciliation:Gather Data: Collect all relevant documents and records related to your VAT transactions. This includes sales invoices, purchase invoices, VAT receipts, bank statements, and any other documents that reflect VAT-related transactions.Organize Transactions: Separate your transactions into two categories: input VAT (VAT you've paid on purchases) and output VAT (VAT you've charged on sales).Verify Accuracy: Review each transaction to ensure accuracy. Check that VAT amounts are correctly calculated and that transactions are correctly categorized as either taxable, zero-rated, or exempt.Reconcile with VAT Returns: Compare the total VAT you've paid (input VAT) during the period with the total VAT you've collected (output VAT) during the same period, as reported in your VAT returns. Your input VAT should match the VAT you've claimed on purchases, and your output VAT should match the VAT you've declared on sales.Adjustments: Make any necessary adjustments for errors or omissions discovered during the reconciliation process. This could include correcting misposted transactions, reclaiming VAT on overlooked expenses, or addressing any discrepancies between your records and your VAT returns.Review Compliance: Ensure that your VAT reconciliation is compliant with HM Revenue & Customs (HMRC) regulations and guidelines. This includes maintaining proper documentation and adhering to VAT rules regarding invoicing, record-keeping, and VAT treatment of specific transactions.Document Reconciliation: Keep detailed records of your VAT reconciliation process, including supporting documentation and explanations for any adjustments made. This documentation will be essential for audit purposes and to demonstrate compliance with VAT regulations.File VAT Return: Once you've completed the reconciliation process and made any necessary adjustments, use the reconciled figures to complete your VAT return accurately. Ensure that the figures reported in your VAT return align with the results of your reconciliation.Monitor and Review: Regularly review and monitor your VAT reconciliation process to identify any recurring issues or areas for improvement. This will help ensure ongoing accuracy and compliance with VAT regulations.By following these steps and maintaining accurate records, you can create an effective VAT reconciliation process that helps ensure compliance with VAT regulations and accurately reflects your business's VAT position.#acccounting#bookkeeping#tax#accountsreceivable#accountspayable#reconciliation#financialanalysis#profitandloss#balancesheet#smallbusiness#payroll#quickbooksonline#qbo#quickbooksproadvisor

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Mastering VAT Obligations: Understanding Withheld VAT and Self-Charged VAT for Financial StabilityIt's crucial to understand that terms like "Withheld VAT" and "Self-Charged VAT" can be easily misunderstood if not properly defined.Although these are important obligations for taxpayers, it's essential to ensure that you are fully equipped to manage your WVAT or VAT obligations effectively. Properly handling these can significantly impact your business's financial health.Let's break it down together:⚜️ Withheld VAT: Shifting the ResponsibilityWithheld VAT occurs when the buyer of goods or services deducts the VAT from the payment due to the seller and remits it directly to the Federal Inland Revenue Service (FIRS).👨🏽💻Affected person?Section 14(3) of the VAT Act empowers the FIRS to appoint any person as an agent for VAT collection. Government agencies, oil and gas companies, and other entities specifically appointed by the FIRS are required to withhold VAT from their payments to suppliers.🧘🏾 How It Works:These entities deduct the VAT amount from the invoice and remit it to the FIRS on behalf of the seller.👩💼Self-Charge VAT: Taking ChargeSelf-Charge VAT applies when a supplier fails to charge VAT on a taxable supply.🧔🏽♂️ Buyer’s Responsibility:In such cases, the buyer must calculate the VAT due, add it to their accounting records, and remit it to the FIRS.👨⚖️Compliance measures:This mechanism ensures that VAT is properly accounted for, even if the supplier neglects to charge it.🏠Take home:🗃️Filing Deadlines: Regular VAT returns are due by the 21st of the following month, but Withheld VAT must be filed earlier, by the 14th.🔖Separate Returns: Withheld VAT is filed separately from your regular VAT return on the TaxPro Max platform.👨🏼💼🧑🏼💼 Non-Resident Suppliers: Special rules apply when dealing with non-resident suppliers, and the responsibility to withhold or self-account for VAT may shift depending on the situation.💵 Currency: VAT is paid in the currency of the transaction.🚸 In Summary:Clear and accurate record-keeping is essential in managing your VAT obligations. If your company is appointed by FIRS, you’ll need to maintain a dedicated "VAT Withheld Account" separate from your regular VAT account to track all deductions and remittances related to Withheld VAT.Armed with this knowledge, you can confidently manage your tax obligations and take significant steps toward financial stability and compliance.

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Value Added Tax (VAT) is a consumption tax levied on goods and services in the UK. Managing VAT effectively is crucial for businesses to ensure compliance and optimize tax liabilities. Here's a guide on VAT management in the UK:1. VAT RegistrationThreshold: If your business's taxable turnover exceeds £85,000 (as of 2023) in a 12-month period, you must register for VAT.Voluntary Registration: Businesses below the threshold can also voluntarily register to reclaim VAT on purchases.2. VAT RatesStandard Rate: 20%Reduced Rate: 5% (e.g., on certain home energy supplies and children's car seats)Zero Rate: 0% (e.g., on most food and children's clothes)Exemptions: Certain goods and services are exempt from VAT (e.g., financial services, education, and healthcare).3. VAT Returns and PaymentsFrequency: VAT returns are usually submitted quarterly, but some businesses may submit them monthly or annually.Making Tax Digital (MTD): Most VAT-registered businesses must keep digital records and submit VAT returns using MTD-compatible software.Due Date: VAT returns and payments are due one calendar month and seven days after the end of the VAT period.4. Accounting for VATStandard Accounting: Pay VAT on sales and reclaim VAT on purchases in the period they are invoiced.Cash Accounting Scheme: Pay VAT on sales when you receive payment and reclaim VAT on purchases when you pay your suppliers, which helps with cash flow.Flat Rate Scheme: Simplifies VAT by allowing businesses with a turnover of up to £150,000 to pay a fixed percentage of their turnover as VAT.5. Reclaiming VATEligible Purchases: Ensure that you reclaim VAT only on eligible business expenses.Evidence: Keep proper records and VAT invoices to substantiate claims.Partial Exemption: If you sell both taxable and exempt goods/services, you might only reclaim VAT on purchases related to the taxable supplies.6. VAT on International TradeImports: Pay import VAT on goods brought into the UK and reclaim it on your VAT return.Exports: Generally, exports are zero-rated, but proper documentation is required to support this.Intrastat and EC Sales List: For businesses trading within the EU, Intrastat declarations and EC Sales Lists may be necessary to report the movement of goods.7. VAT Audits and ComplianceRecords: Keep VAT records for at least six years.Penalties: Be aware of penalties for late returns, inaccuracies, or non-compliance.Audits: HMRC may conduct audits to ensure compliance, so maintain accurate and detailed records.8. VAT Schemes for SMEsAnnual Accounting Scheme: Suitable for businesses with a turnover of up to £1.35 million, allowing them to make nine interim payments and one annual return.Retail Schemes: Simplifies VAT calculations for retail businesses by using a single calculation for various rates.#Accounting #Bookkeeping #VATManagementUK #Quickbooks #Xero

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🔔 January 2024 alerts!📢 Germany – Dauerfrist applicationGerman VAT-registered companies can get a one-month due date extension to file their VAT returns ("dauerfristverlängerung"). This application needs to be filed by the 9th of February.Monthly taxpayers must make a prepayment equalling 1/11 of the annual VAT amount due of the previous calendar year. Also, they must renew this application and deposit every year. Learn more: https://hubs.li/Q02gLHFv0📢 Italy – Check the turnover for VAT payments frequency in 2024If your company is making quarterly VAT payments, you should check the annual turnover for 2023 and verify if they exceed the following thresholds:✅ EUR 800,000 for goods or✅ EUR 500,000 for servicesIn case the thresholds are exceeded, you must start making the VAT payments every month starting by the January 2024 reporting period. Also, this change will have to be indicated in the annual VAT return 2023 that you will need to prepare in a few months. Learn more: https://hubs.li/Q02gLHKz0📢 RomaniaBusiness VAT registered in Romania must check the turnover frequency beginning in January each year.Once the conditions for frequency change are met, communicating the change in frequency of filing is a mandatory action from taxpayers. Also, quarterly taxpayers must submit a form 700 to declare that the annual turnover did not exceed the EUR 100,000 threshold.The two criteria that must be taken into account concerning the reporting frequency are: if Intra-Community acquisitions of goods were performed during 2023, and if the annual turnover of 2023 exceeds EUR 100,000, then the VATR must be filed monthly. Otherwise, quarterly reporting periods are due. 📢 Spanish annual VAT returns and other checks📆 This year, the Spanish annual VAT return is due on Tuesday 30/01/2024.Companies filing SII books must not submit the Spanish annual VAT return. However, they should complete an extra section in the December/Q4 VAT return (form 303).It is also a good moment to check the last year’s turnover. If the turnover exceeds 6.010.121,04 EUR the company will become a “Big company - Grandes Empresas” and will fall under monthly periodicity. This change must be communicated to the tax authority.Finally, those entities that applied for REDEME or import deferment in November 2023 should start the monthly VATR filings from January 2024. Learn more: https://hubs.li/Q02gLHVZ0📢 EUIntrastat thresholds 2024 and new commodity codes 2024 are released.Check the 2024 updates here 👉 https://hubs.li/Q02gLHXK0#VAT #VATcompliance #Internationaltax #taxtechnology

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News from HMRC! 📢HM Revenue & Customs has launched a digital tool to help businesses estimate what registering for VAT may mean for them. 💻 The tool has been developed following feedback from small businesses who suggested that “an online tool would be helpful to show when their turnover could require businesses to register for VAT and its effect on profits.” 💷 A business must register for VAT if:🔴 their total VAT taxable turnover for the previous 12 months is more than £90,000 -known as the ‘VAT threshold’ - until 31 March 2024 this was 85,000.🔴 they expect their turnover to go over the £90,000 VAT threshold in the next 30 days.🔴 they are an overseas business not based in the UK and supply goods or services to the UK (or expect to in the next 30 days) – regardless of VAT taxable turnover.Did you know there are around 300,000 new VAT registrations each year. ❓ Many of the business owners I start working with are unaware of when and why they’d need to register for VAT. A tool like this could therefore have potentially avoided issues further down the line if this tool would have been available to them from the beginning. 🤔 The estimator can help any business see what registering for VAT could mean whilst also directing them towards more information. 😊 You can read about the tool and the initiative here:HMRC VAT registration estimatorAnd you can find the tool here:VAT Registration estimatorIf this feels overwhelming or if you want help with your business finances. You can of course turn to me! I am happy to talk about VAT, how you can save and reclaim money, and everything in between. 💚#VAT#businessfinances#HMRC

SELF CHARGE VATIn continuation of our VAT series, we shall be treating SELF CHARGE VAT for todayWHAT IS SELF CHARGE VAT: It implies subjecting vatable goods purchased or vatable service received to VAT, due to the vendor not subjecting it to VAT because it is a small company exempted from charging VAT. REASONS FOR SELF CHARGING VATIf a small entity that is exempted from charging VAT made a vatable to a big entity, in line with 2019 finance act, the big entity must self charge for the VAT and remit to FIRS. The reason for this is to ensure all vatable supplies are subjected to VAT. Furthermore, it is the entity that is exempted from VAT and not the transactions it is rendering or the goods it is supplying, VAT on the goods must be charged by the buying entity.HOW TO ACCOUNT FOR SELF CHARGE VATStep 1: Login to taxpromaxStep 2: Click on WVAT and download the templateStep3: Input the transactions and amount net of VAT on the templateStep 3: Input the TIN of the vendor if any or just put 0Step 4: Upload the templateStep 5: Click on proceed till you get to the last page that shows the VAT amount to remitStep 6: Make payment either online or print the invoice and take it to the bankDIFFERENCE BETWEEN SELF CHARGE VAT AND WITHHELD VATKey differenceSELF CHARGE VAT: Transactions was vatable but not subjected to VAT. The buying entity charge VAT and remitWithheld VAT: Transactions was vatable and subjected to VAT but amount withhold by the agency appointed by FIRS e.g MTN, Ministries and remit on the vendor’s behalf on or before 14 of the subsequent month of the transactions. VAT withhold by the buying entity and remit on the seller’s behalfBENEFIT OF SELF CHARGING FOR VATØAll vatable supplies will be subjected to VAT irrespective of whether the vendor charge VAT, thereby saving the entity from fines and penalties during VAT auditØIt enabled the entity to trade with vendors in the open market and self account for the VAT on those goodsØThe entity will be enabled the entity to claim input VAT on the goods purchased provided it qualifies as a stock in trade.CONCLUSIONSelf charging VAT ensures that an entity is fully compliance and remit the correct amount for all vatable supplies made to it. It is not tenable that an entity did not charge VAT because the selling entity did not charge VAT. The implication is that the buying entity will be liable to pay the VAT amount with interest and penalty applied. Kindly engage and share your comments.Cheers!!!

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Explain of 9 Box in UK VAT Return:In the UK, the VAT Return (form VAT100) is a quarterly or monthly report submitted to HM Revenue & Customs (HMRC) by VAT-registered businesses. The return contains nine boxes, each representing different aspects of VAT reporting. Here's a breakdown of what each box represents:1. BOX 1: VAT DUE IN THIS PERIOD ON SALES AND OTHER OUTPUTSThis box is for the total VAT you charged on your sales and other outputs (goods and services) in the period. This includes VAT on sales to customers both in the UK and internationally.2. BOX 2: VAT DUE IN THIS PERIOD ON ACQUISITIONS FROM OTHER EC MEMBER STATESIf you have purchased goods from other European Community (EC) member states, you need to account for the VAT due on these acquisitions. This box includes the VAT due on goods brought into the UK from other EU countries.3. BOX 3: TOTAL VAT DUEThis is the sum of the VAT due from Boxes 1 and 2. It represents the total VAT you owe to HMRC for the period before accounting for any VAT reclaimable on your purchases.4. BOX 4: VAT RECLAIMED IN THIS PERIOD ON PURCHASES AND OTHER INPUTS (INCLUDING ACQUISITIONS FROM THE EC)This box is for the total VAT you are claiming back on your business purchases and other inputs during the period. This includes VAT on purchases from both within the UK and from other EC member states.5. BOX 5: NET VAT TO PAY TO HMRC OR RECLAIMThis is the difference between Box 3 and Box 4. If the amount in Box 3 is greater than Box 4, this is the VAT you need to pay to HMRC. If Box 4 is greater, this is the VAT you can reclaim from HMRC.6. BOX 6: TOTAL VALUE OF SALES AND ALL OTHER OUTPUTS EXCLUDING ANY VATThis box is for the total value of all your sales and other outputs (goods and services) excluding VAT. This includes all UK and international sales, and the value should be net of VAT.7. BOX 7: TOTAL VALUE OF PURCHASES AND ALL OTHER INPUTS EXCLUDING ANY VATThis box is for the total value of all your purchases and other inputs (goods and services) excluding VAT. This includes all UK and international purchases, and the value should be net of VAT.8. BOX 8: TOTAL VALUE OF ALL SUPPLIES OF GOODS AND RELATED COSTS, EXCLUDING ANY VAT, TO OTHER EC MEMBER STATESIf you supplied goods to other EC member states, you need to report the total value of these supplies here, excluding VAT. This includes any related costs such as freight and insurance.9. BOX 9: TOTAL VALUE OF ALL ACQUISITIONS OF GOODS AND RELATED COSTS, EXCLUDING ANY VAT, FROM OTHER EC MEMBER STATESThis box is for the total value of all goods you acquired from other EC member states, excluding VAT. This also includes related costs such as freight and insurance.#UKVAT #VATReturn #HMRC #TaxCompliance #VATReporting #UKBusiness #Accounting #TaxReturn #SmallBusinessUK #FinanceTips #QuickBooksOnline #xero #cloudaccounting #reconciliation

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UNDERSTANDING INPUT VAT AND OUTPUT VATInput VAT and Output VAT are fundamental concepts in the VAT system, crucial for businesses to understand for accurate tax reporting and compliance.Input VATDefinition: Input VAT is the value-added tax a business pays on purchases of goods and services used for business purposes.Example: If a company buys raw materials for manufacturing, the VAT paid on these purchases is input VAT.Claimable: Businesses can usually reclaim input VAT from the government, reducing their overall VAT liability, provided the purchases are for business use and proper documentation is maintained.Output VATDefinition: Output VAT is the value-added tax a business charges on the sale of its goods and services.Example: When the company sells its manufactured products, it charges VAT on these sales. This charged VAT is the output VAT.Payable: The business collects output VAT from customers and is required to remit it to the tax authorities. This amount is reduced by any input VAT the business has paid.Key Differences Between Input VAT and Output VAT1. Nature: - Input VAT: Tax paid on purchases. - Output VAT: Tax collected on sales.2. Impact on Business: - Input VAT: Can be reclaimed, thus reducing the total VAT liability. - Output VAT: Must be remitted to the tax authorities, increasing the total VAT liability.3. Documentation: - Input VAT: Requires proper tax invoices and receipts to be reclaimable. - Output VAT: Requires accurate recording of sales and VAT charged to customers.4. Calculation: - Input VAT: Based on the cost of goods and services purchased. - Output VAT: Based on the selling price of goods and services.Practical ExampleImagine a furniture manufacturer:-Purchases: Buys wood and tools for TZS 1,000,000 plus TZS 180,000 VAT. The TZS 180,000 is input VAT.- Sales: Sells furniture for TZS 2,000,000 plus TZS 360,000 VAT. The TZS 360,000 is output VAT.VAT Calculation:-Output VAT: TZS 360,000 (collected from customers)- Input VAT: TZS 180,000 (paid on purchases)-Net VAT Payable: TZS 360,000 (output) - TZS 180,000 (input) = TZS 180,000 (payable to the government)This example shows how businesses offset input VAT against output VAT to determine their net VAT Payable. Understanding these concepts helps businesses ensure compliance and optimize their tax obligations.

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Dear Accountants, here is a quick guide on how to file your VAT in those months when you have both transactions in which VAT were deducted at source and those that VAT were paid with. The knowledge of this is very important especially for businesses servicing a wide range of clients. This is because they would sometimes have clients that would pay them with VAT and some others who would deduct VAT at source.So on a month on month basis, such businesses are faced with the issue of how to file their VAT because not all invoices sent out were paid with VAT. Let’s quickly use a real life scenario to buttress our point:👉In the month of October 2023, your company Quic Quic Ltd sent out 10 invoices to different clients for services rendered to them. 👉All ten (10) invoices sent out during the month was inclusive of VAT. The total sum of the invoices was N2,000,000 and the total VAT on the invoices was N150,000, leading to a total sum receivable of N2,150,000. 👉During the month, 8 out of the 10 invoices were settled with VAT while the last two invoices (which was sent to a bank) were settled without VAT. 👉The total VAT received at the end of the month from the 8 invoices was N120,000 while the remaining N30,000 was deducted at source. 👉You are the Accountant of Quic Quic Limited, how do you file the VAT for the month of October. 📌To do that:🔘Log in to your Tax pro max portal🔘Go to the “Taxes due” section 🔘Check for VAT for the month of October and click on process 🔘Takes you to another page, On the new page click on sales schedule 🔘Select the currency of transaction and upload your sales schedule***Please note that your sales schedule should include ALL the sales received for that month, whether or not they paid with VAT. In this case our sales schedule would have a total sales figure of N2m.🔘Click on proceed 🔘On the next page, select any input VAT you have (if any) and proceed 🔘Takes you to the sales adjustment page, make any adjustments you have (if any), then click on proceed🔘And now you would be taken to the page for the VAT form. On the VAT form, you would see that your VAT payable is N150k.Don’t panic! Take a sip of the drink below😉🔘Now on that same page, scroll down to Line 190 “Withheld VAT” and input the N30k deducted at source 🔘The system recalculates your VAT payable to reflect the 30k🔘By now, the VAT payable would be showing N120k which tallies with the amount collected by you. 🔘Once you’ve checked that all is fine🔘Click on the submit button 🔘Then choose the means of payment and pay. 🔘Voila you’re done filing and remitting your VAT. I hope this helps. Found this insightful? Please comment and repost so others can learn.

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HM Revenue and Customs (HMRC) has launched a digital tool to help businesses estimate the impact of VAT registration. The VAT Registration Estimator was developed based on feedback from small businesses.Businesses must register for VAT if:🔵 Their total VAT taxable turnover for the past 12 months exceeds £90,000 - known as the VAT threshold.🔴 They expect their turnover to exceed the £90,000 VAT threshold in the next 30 days.⚫ They are an overseas business supplying goods or services to the UK (or expect to in the next 30 days) – regardless ofVATtaxable turnover.VAT-registered businesses must charge VAT on eligible sales and can reclaim it on eligible purchases. The estimator helps businesses understand the implications of VAT registration and links to further information about the process.https://lnkd.in/gcPTpMyK#VAT #VATRegistration #VATThreshold

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